Resumen de Economic recovery beckons for fused alumina market
China has by far the largest fused alumina capacity estimated at about 1.6-1.7m tpa in terms of effective capacity, the vast majority of it BFA, based on local bauxite, and representing more than 70% of world capacity, although production of WFA is now understood to be considerablyEhigher than the 40,000 tpa of recent years. WFA output has traditionally been variable as production is relatively small and purchases of alumina feedstock are often on a spot basis. If spot prices are high - and they have hit more than $600/tonne in recent years - but have been as low as $170/tonne, it is often unfeasible to produce WFA economically.
While there does not seem to be any critical shortages in the supply of calcined bauxite raw material for BFA in the current market conditions, there could well be shortages once there is a more robust recovery in the world economy. Chinese supply has been restricted through export controls, but actual exports have been falling below the export quotas due to low demand. The export quotas are being replaced with a different system, but it looks unlikely that the availability of calcined bauxite for export markets will be able to increase rapidly once the economy picks up, given the competition for material from the metallurgical alumina industry. Increased local consumption in BFA, proppants and refractories may well mean that export quantities will be restricted because of availability, rather than by export controls. It may also mean increased costs for local producers, which will eventually feed through to BFA prices. Exports of all grades of calcined bauxite (and the category also includes calcined clays) fell from 650,000 tonnes in 2011 to 611,000 tonnes in 2012.
China has for long been the dominant producer of BFA, with an estimated 1.5m tonnes of production in 2012 out of a world total of around 1.9-2m tpa. It has not been seen as a significant source of WFA as it has not had the competitive advantage of being the major world producer of the raw material, calcined bauxite in the case of BFA. The raw material for WFA, in contrast, is readily available in many parts of the world without having to face export taxes and, in the past, licence fees that were imposed on exports of calcined bauxite - fees that were not imposed on local producers of BFA. In reality, feedstock alumina prices for WFA in China are probably higher than in many other parts of the world. However, low-cost WFA is now being exported from China at very competitive prices compared with other world sources, with some observers noting that WFA prices being offered out of China are getting close to prices for BFA in international markets.
